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Question
A, B and C were partners in a firm sharing profit in the ratio of 3:2:1. On 31-3-2015 their Balance sheet was as follows :
Balance Sheet of A,B and C as on 31-3-2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors General Reserve
Capitals A 60,000 B 40,000 C 20,000 |
84,000 21,000
1,20,000 |
Bank Debtors Stock Investments Furniture & Fittings Machinery
|
17,000 23,000 1,10,000 30,000 10,000 35,000
|
| 2,25,000 | 2,25,000 |
On the above date D was admitted as new partner and it was decided that
(i) The new profit sharing ratio between A, B, C and D will be 2:1:1:1.
(ii) Goodwill of the firm was valued at Rs.90,000 and D brought his share of goodwill premium in cash.
(iii) The Market value of investments was Rs.24,000
(iv) Machinery will be reduced to Rs.29,000
(v) A Creditor of Rs.3,000was not likely to claim the amount and hence to be written off.
(vi) D will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluations Account, Partner’s Capital Accounts and Balance Sheet of the reconstitute firm
Solution
Revaluation Account
Dr. Cr.
| Particulars | Amount(Rs.) | Particulars | Amount(Rs.) |
|
To Investments A/c To Machinery A/c
|
6,000 6,000
|
By Creditors A/c
By Loss on Revaluation A/c A’s Capital A/c 4,500 B’s Capital A/c 3,000 C’s Capital A/c 1,500
|
3,000
9,000
|
| 12,000 | 12,000 |
Partner’s Capital Account
Dr. Cr.
| Particulars | A (Rs.) | B (Rs.) | C (Rs.) | D (Rs.) | Particulars | A (Rs.) | B (Rs.) | C (Rs.) | D (Rs.) |
|
Reval A/c Balance c/d
|
4,500 81,000
|
3,000 44,000
|
1,500 22,000
|
29,400
|
Balance c/d Gen. Reserve Prem. for G/w Cash A/c |
60,000 10,500 15,000
|
40,000 7,000
|
20,000 3,500
|
29,400 |
| 85,500 | 47,000 | 23,500 | 29,400 | 85,500 | 47,000 | 23,500 | 29,400 |
Balance Sheet
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors
Capitals : A 81,000 B 44,000 C 22,000 D 29,400
|
81,000
1,76,400
|
Bank (17,000 + 29,400 + 15,000) Debtors Stock Investments Furniture & Fittings Machinery
|
61,400 23,000 1,10,000 24,000 10,000 29,000
|
| 2,57,400 | 2,57,400 |
Working Notes :
WN 1: Calculation of Sacrificing Ratio
Sacrificing Ratio = Old Ratio - New Ratio
A's = (3/6) - (2/6) = 1/6
B's = (2/6) - (2/6) = Nil
C's = (1/6) - (1/6) = Nil
WN 2: Adjustment of Goodwill
D's Share of Goodwill = 90,000 x (1/6) = 15,000
15,000 will be credited to A's Capital A/c, as he is the only sacrificing partner
WN 3: Calculation of D’s Proportionate Capital
Adjusted Old Capital of A = 60,000 + 10,500 + 15,000 - 4,500 = 81,000
Adjusted Old Capital of B = 40,000 + 7,000 - 3,000 = 44,000
Adjusted Old Capital of C = 20,000 + 3,500 - 1,500 = 22,000
Total Adjusted Capital = 81,000 + 44,000 + 22,000 = 1, 47,000
D’s Proportionate Capital = Total Adjusted Capital x D’s Profit Share x Reciprocal of Combined New Share of Old Partners
= 1,47,000 x (1/6) x (6/5)
= 29,400
APPEARS IN
RELATED QUESTIONS
Ashok, Bhim and Chetan were partners in a firm sharing profits in the ratio of 3:2:1.
Their Balance Sheet as on 31-3-2015 was as follows:
Balance Sheet of Ashok, Bhim and Chetan
as on 31-3-2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Bills Payable General Reserve Capitals Ashok 2,00,000 Bhim 1,00,000 Chetan 50,000 |
1,00,000 40,000 60,000
3,50,000 |
Land Building Plant Stock Debtors Bank
|
1,00,000 1,00,000 2,00,000 80,000 60,000 10,000
|
| 5,50,000 | 5,50,000 |
Ashok, Bhim and Chetan decided to share the future profits equally, w.e.f. April 1, 2015. For this it was agreed that:
(i) Goodwill of the firm be valued at 3,00,000
(ii) Land be revalued at 1, 60,000 and building be depreciated by 6%.
(iii) Creditors of 12,000 were not likely to be claimed and hence be written off
Prepare Revaluation Account Partners’ Capital Accounts and Balance Sheet of the reconstituted firm
X, Y and Z were partners in a firm sharing profit’s in the firm of 5:3:2. On 31-3-2015 their Balance Sheet was as follows:
Balance sheet of X,Y and Z as on 31st march,2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors Investment Fluctuation Fund P & L Account Capital: X 50,000 Y 40,000 Z 20,000
|
21,000 10,000 40,000
1,10,000
|
Land and Building Motor Vans Investments Machinery Stock Debtors 40,000 Less: 3,000 Cash |
62,000 20,000 19,000 12,000 15,000
37,000 16,000 |
| 1,81,000 | 1,81,000 |
On the above date Y retired and X and Z agreed to continue the business on the following terms:
(1) Goodwill of the firm was valued at Rs.51,000
(2) There was a claim of 4,000 for Workmen’s Compensation.
(3) Provision for bad debts was to be reduced by 1,000
(4) Y will be paid 8,200 in cash and the balance will be transferred in his loan account which will be paid in four equally yearly instalments together with interest @ 10% p.a.
(5) The new profit sharing ratio between X and Z will be 3:2 and their capitals will be in their new profit sharing ratio. The Capital adjustments will be done by opening current Accounts
Prepare Revaluation Account. Partner’s Capital Accounts and the Balance Sheet of reconstituted firm.
L, M and N were partners in a firm sharing profit in the ratio of 3:2:1. Their Balance Sheet on 31.3.2015 was as follows :
Balance Sheet of L,M and N as on 31-3-2015
| Liabilities | Amount(Rs.) | Assets | Amount(Rs.) |
|
Creditors General Reserve Capitals L 1,20,000 M 80,000 N 40,000
|
1,68,000 42,000
2,40,000
|
Bank Debtors Stock Investments Furniture Machinery
|
34,000 46,000 2,20,000 60,000 20,000 70,000
|
| 4,50,000 | 4,50,000 |
On the above date O was admitted as a new partner and it was decided that:
(i) The new profit sharing ratio between L, M, N and 0 will be 2: 2: 1: 1.
(ii) Goodwill of the firm was valued at Rs.1,80,000 and O brought his share of goodwill premium in cash.
(iii) The market value of investments was Rs.36,000.
(iv) Machinery will be reduced to Rs.58,000.
(v) A creditor of Rs.6,000 was not likely to claim the amount and hence to be written-off.
(vi) O will bring proportionate capital so as to give him 1/6th share in the profits of the firm.
Prepare Revaluation Account. Partner's Capital Accounts and the Balance Sheet of the New Firm
A, B and C were partners in a firm sharing profit in the ratio of 3:2:1. On 31-3-2015 their Balance sheet was as follows :
Balance Sheet of A,B and C as on 31-3-2015
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Bills Payable
Capitals A 1,00,000 B 50,000 C 25,000 General Reserve |
50,000 20,000
1,75,000 30,000 |
Land Building Plant Stock Debtors Bank
|
50,000 50,000 1,00,000 40,000 30,000 5,000
|
| 2,75,000 | 2,75,000 |
On the above date D was admitted as new partner and it was decided that:
(i) Goodwill of the firm will be valued at 1,50,000
(ii) Land will be revalued at 80,000 and building be depreciated by 60%.
(iii) Creditors of 6,000 were not likely to be claimed and hence should be written off
Prepare Revaluations Account, Partner’s Capital Accounts and Balance Sheet of the reconstitute firm.
A, B and C were partners in a firm sharing profits in the ratio of 3:2:1. On 1.4.2014 their Balance Sheet was as follows :
| Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
Creditors Provident Fund General Reserve Capital Accounts A 80,000 B 73,000 C 40,000 |
25,200 3,000 21,000
1,93,000 |
Bank Debtors 60,000 Less: Provision 2,000 Stock Investment Patents Machinery |
8,200
58,000 50,000 20,000 10,000 96,000 |
| 2,42,200 | 2,42,200 |
On the above date, C retired. It was agreed that:
(i) Goodwill of the firm will be valued at Rs 5,400.
(ii) Depreciation of 10% was to be provided on machinery.
(iii) Patents were to be reduced by 20%.
(iv) Liability on account of Provident Fund was estimated at Rs 2,500.
(v) C took over investments for Rs 31,700.
(vi) A and B decided to adjust their capitals in proportion to their profit sharing ratio. For this
purpose, current accounts were opened.
Prepare Revaluation Account and Partners' Capital Accounts on C's retirement
Shikhar and Rohit were partners in a firm sharing profit in the ratio 7:3. On 1st April 2013, they admitted Kavi as a new partner for a ¼ share in the profit of the firm. Kavi brought Rs 4,30,000 as his capital and Rs 25,000 for his share of goodwill premium. The Balance Sheet of Shikhar and Rohit as on 1st April 2013 was as follows:
| Balance Sheet of Shikhar and Rohit as on 1st April 2013 | |||
| Liabilities | Rs | Assets | Rs |
|
Capital: Shikhar 8,00,000 Rohit 3,50,000 General Reserve Workman’s Compensation Fund Creditors |
11,50,000 1,00,000 1,00,000 1,50,000 |
Land and Building Machinery Debtors 2,20,000 Less: Provision 20,000 Stock Cash |
3,50,000 4,50,000
2,00,000 3,50,000 1,50,000 |
| 15,00,000 | 15,00,000 | ||
It was agreed that:
1. The value of Land and Building will be appreciated by 20%.
2. The value of Machinery will be depreciated by 10%.
3. The liabilities of Workmen's Compensation Fund was determined at Rs 50,000.
4. Capitals of Shikhar and Rohit will be adjusted on the basis of Kavi's capital and actual cash to be brought in or to be paid off as the case may be.
Prepare Revaluation Account, Partners' Capital Accounts and the Balance Sheet of the new firm.
Sahaj and Nimish are partners in a firm. They share profits and losses in the ratio of 2: 1. Since both of them are specially abled, sometimes they find it difficult to run the business on their own. Gauri, a common friend decides to help them. Therefore, they admitted her into a partnership for a 1/3rd share. She brought her share of goodwill in cash and proportionate capital. At the time of Gauri's admission, the Balance sheet of Sahaj and Nimish was as under:
| Liabilities | Rs | Assets | Rs |
|
Capital Accounts: Sahaj 1,20,000 Nimish 80,000 General Reserve Creditors Employee's Provident Fund |
2,00,000 30,000 30,000 40,000 |
Machinery Furniture Stock Sundry Debtors Cash
|
1,20,000 80,000 50,000 30,000 20,000
|
| 3,00,000 | 3,00,000 |
It was decided to:
a. Reduce the value of a stock by `5,000.
b. Depreciate furniture by 10% and appreciate machinery by 5%.
c. Rs 3,000 of the debtors proved bad. A provision of 5% was to be created on Sundry Debtors for doubtful debts.
d. Goodwill of the firm was valued at Rs 45,000.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the reconstituted firm. Identify the value being conveyed in the question.
X, Y and Z were partners in a firm sharing profits in the ratio of 5 : 3 : 2. The firm closes its books on 31st March every year. On 30.9.2016, Z died. The partnership deed provided that on the death of a partner his executors will be entitled to the following :
(i) Balance in his capital account and interest @ 12% per annum. On 1.4.2016 balance in Z's Capital account was Rs 80,000.
(ii) His share in the profits of the firm in the year of his death, which will be calculated on the basis of rate of net profit on sales of the previous year which was 25%. The sales of the firm till 30.9.2016 were Rs 4,00,000.
(iii) His share on the goodwill of the firm. The goodwill of the firm on Z's death was valued at Rs 3,00,000.
The partnership deed also provided that the following deductions will be made from the amount payable to the executor of the deceased partner:
(i) His drawing in the year of his death. Z has withdrawn Rs 30,000 till 30.9.2016.
(ii) Interest on drawing @ 12% per annum which was calculated as Rs 2,000.
The accountant of the firm prepared Z's Capital Account to be presented to his executor but in a hurry did not complete it. Z's Capital Account as prepared by the firm's accountant is presented below :
|
Dr. |
Z’s Capital Account |
Cr. |
|||
|
Date |
Particulars |
Amount (Rs) |
Date |
Particulars |
Amount (Rs) |
|
2016 |
|
|
2016 |
|
|
|
Sep. 30 |
…………… |
30,000 |
April 1 |
…………… |
80,000 |
|
Sep. 30 |
…………… |
2,000 |
Sep. 30 |
…………… |
4,800 |
|
Sep. 30 |
…………… |
……... |
Sep. 30 |
…………… |
20,000 |
|
|
|
|
Sep. 30 |
…………… |
……... |
|
|
|
|
Sep. 30 |
…………… |
……... |
|
|
|
1,64,800 |
|
|
1,64,800 |
|
|
|
|
|
|
|
You are required to complete Z's Capital Account.
A and Z are partners in a firm sharing profits in the ratio of 7 : 3. Their Balance Sheet as on 31.3.2016 was as follows was as follows:
|
Balance Sheet of A and Z as on 31.3.2016 |
||||
|
Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
|
|
Sundry Creditors |
60,000 |
Cash |
36,000 | |
|
Provision for Bad Debts |
6,000 |
Debtors |
54,000 | |
|
Outstanding Wages |
9,000 |
Stock |
60,000 | |
|
General Reserve |
15,000 |
Furniture |
1,20,000 | |
|
|
|
Plant & Machinery |
120,000 | |
|
Capitals: |
|
|
||
|
A |
1,20,000 |
|
|
|
|
Z |
1,80,000 |
3,00,000 |
|
|
|
|
3,90,000 |
|
3,90,000 |
|
|
|
|
|
||
On the above date B was admitted for `1/4` share in the profits on the following terms:
(i) B will bring Rs 90,000 as his capital and Rs 30,000 as his share of goodwill premium, half of which will be withdrawn by A and Z.
(ii) Debtors Rs 4,500 will be written off and a provision of 5% will be created on debtors for bad and doubtful debts.
(iii) Outstanding wages will be paid off.
(iv) Stock will be depreciated by 10%, furniture by Rs 1,500 and Machinery by 8%.
Pass necessary journal entries for the above transactions in the books of the firm on B’s admission.
N, S and G were partners in a firm sharing profits and losses in the ratio of 2 : 3 : 5. On 31.3.2016 their Balance Sheet was as under:
A, B and C were partners in a firm sharing profits in the ratio of 5 : 3 : 2. On 31-3-2015 their Balance Sheet was as follows:
|
Balance Sheet of A, B and C as on 31-3-2015 |
|||||
|
Liabilities |
Amount (Rs) |
Assets |
Amount (Rs) |
||
|
Creditors |
63,000 |
Land and Building |
1,86,000 |
||
|
Investment |
|
Motor Vans |
60,000 |
||
|
Fluctuation Fund |
30,000 |
Investments |
57,000 |
||
|
P & L Account |
1,20,000 |
Machinery |
36,000 |
||
|
Capitals: |
|
Stock |
45,000 |
||
|
A |
1,50,000 |
|
Debtors |
1,20,000 |
|
|
B |
1,20,000 |
|
Less: Provision |
9,000 |
1,11,000 |
|
C |
60,000 |
3,30,000 |
Cash |
48,000 |
|
|
|
5,43,000 |
|
5,43,000 |
||
|
|
|
|
|||
On the above date B retired and A and C agreed to continue the business on the following terms :
(1) Goodwill of the firm was valued at Rs 1,53,000.
(2) Provision for bad debts was to be reduced by Rs 3,000.
(3) There was a claim of Rs 12,000 for workmen compensation.
(4) B will be paid Rs 24,600 in cash and the balance will be transferred to his loan account which will be paid in four equal yearly instalments together with interest @ 10% p.a.
(5) The new profit sharing ratio between A and C will be 3:2 and their capital will be in their new profit sharing ratio. The capital adjustments will be done by opening current accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of A and C.
Prepare a Cash Flow Statement on the basis of the information given in the Balance Sheet of Libra Ltd. as at 31.3.2013 and 31.3.2012.
|
|
Particulars |
Note No. |
31.3.2013 Rs |
31.3.2012 Rs |
|
I |
Equity and Liabilities : |
|
|
|
|
1. |
Shareholder’s Funds : |
|
|
|
|
|
(a) Share Capital |
|
8,00,000 |
6,00,000 |
|
|
(b) Reserve and Surplus |
|
4,00,000 |
3,00,000 |
|
2. |
Non-Current Liabilities : |
|
|
|
|
|
Long Term Borrowings |
|
1,00,000 |
1,50,000 |
|
3. |
Current Liabilities : |
|
|
|
|
|
Trade Payables |
|
40,000 |
48,000 |
|
|
Total |
|
13,40,000 |
10,98,000 |
|
|
|
|
|
|
|
II |
Assets |
|
|
|
|
1. |
Non-Current Assets : |
|
|
|
|
|
(a) Fixed Assets : |
|
|
|
|
|
(i) Tangible Assets |
|
8,50,000 |
5,60,000 |
|
|
(b) Non-Current Investment |
|
2,32,000 |
1,60,000 |
|
2. |
Current Assets : |
|
|
|
|
|
(a) Current Investments (Marketable) |
|
50,000 |
1,34,000 |
|
|
(b) Inventories |
|
76,000 |
82,000 |
|
|
(c) Trade Receivables |
|
38,000 |
92,000 |
|
|
(d) Cash and Cash Equivalents |
|
94,000 |
70,000 |
|
|
Total |
|
13,40,000 |
10,98,000 |
|
|
Murari and Vohra were partners in a firm with capitals of Rs 1,20,000 and Rs 1,60,000 respectively. On 1.4.2010 they admitted Yadav
as a partner for non-fourth share in profits on his payment of Rs 2,00,000 as his capital and Rs 90,000 for this one-fourth share of goodwill.
On that date the creditors of Murari and Vohra were Rs 60,000 and Bank Overdraft was Rs 15,000. Their assets apart from cash included Stock Rs 10,000; Debtors Rs 40,000; Plant and Machinery Rs 80,000; Land and Building Rs 2,00,000. It was agreed that stock should be depreciated by Rs 2,000; Plant and Machinery by 20%, Rs 5,000 should be written off as bad debts and Land and
Building should be appreciated by 25%.
Prepare Revaluation Account, Capital Accounts of Murari, Vohra and Yadav and the Balance Sheet of the new firm.
From the following Receipts and Payments Account of Kolkata Sports Club for the year ended
31.3.2011, prepare Income and Expenditure Account.
|
Receipts and Payments Account of Kolkat Sports Club for the year ended 31.3.2011 |
|||
|
Dr. |
|
|
Cr. |
|
Receipts |
Amount Rs |
Payments |
Amount Rs |
|
To Balance b/d |
3,200 |
By Salary |
1,800 |
|
To Subscription |
22,500 |
By Rent (paid on 30.9.2010 for 12 months) |
2,300 |
|
To Entrance Fees (including Rs 1,000 as capital income) |
3,000 |
By Electricity |
1,000 |
|
To Donations |
750 |
By Taxes |
2,200 |
|
To Rent of hall |
1,750 |
By Printing and Stationery |
400 |
|
To Accrued interest for the year 2009 – 2010 |
2,000 |
By Sundry Expenses |
900 |
|
|
|
By Books |
7,500 |
|
|
|
By 9% Fixed Deposit (on 1.4.2010) |
15,200 |
|
|
|
By Balance c/d |
1,900 |
|
|
33,200 |
|
33,200 |
|
|
|
|
|
Khanna, Seth and Mehta were partners in a firm sharing profit in the ratio of 3 : 2 : 5. On
31.12.2010 the Balance Sheet of Khana, Seth and Mehta was as follows:
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
|
|
Capitals: |
|
Goodwill |
3,00,000 |
|
|
Khanna: |
3,00,000 |
|
Land and Building |
5,00,000 |
|
Seth: |
2,00,000 |
|
Machinery |
1,70,000 |
|
Mehta: |
5,00,000 |
10,00,000 |
Stock |
30,000 |
|
General Reserve |
1,00,0000 |
Debtors |
1,20,000 |
|
|
Loan from Seth |
50,000 |
Cash |
45,000 |
|
|
Creditors |
75,000 |
Profit and Loss Account |
60,000 |
|
|
|
12,25,000 |
|
||
On 14th March 2011, Seth died.
The partnership deed provides that on the death of a partner the executor of the deceased partners
is entitled to:
(i) Balance in Capital Account;
(ii) Share in profits upto the date of death on the basis of last year’s profit;
(ii) His share in profit/loss in revaluation of assets and re-assessment of liabilities which were as follows:
(a) Land and Building was to be appreciated by Rs 1,20,000;
(b) Machinery was to be depreciated to Rs 1,35,000 and stock to Rs 25,000;
(c) A provision of `2 1/2%` for bad and doubtful debts was to created on debtors;
(iv) The net amount payable to Seth’s executors was transferred to his loan account which was to be paid later.
Prepare Revalution Account, Partners Capital Accounts, Seth’s Executors Account and the
Balance Sheet of Khanna and Mehta who decided to continue the business keeping their capital balances in their new profit sharing ratio. Any surplus of deficit to be transferred the current account of the partners.
A, B and C were partners sharing profits in the ratio of 3 : 1 : 1. Their Balance-Sheet as on March 31st 2009, the date on which they dissolve their firm, was as follows:
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||
|
Capitals: |
|
Sundry Assets |
17,000 |
||
|
A |
27,500 |
|
Stock |
7,800 |
|
|
B |
10,000 |
|
Debtors |
24,200 |
|
|
C |
7,000 |
44,500 |
Less: Provision for doubtful debts |
1,200 |
23,000 |
|
Loan |
1,500 |
Bills Receivable |
1,000 |
||
|
Creditors |
6,000 |
Cash |
3,200 |
||
|
|
52,000 |
|
52,000 |
||
|
|
|
|
|||
It was agreed that:
(a) A to take over Bills Receivable at Rs 800, debtors amounting to Rs 20,000 at 17,200 and the creditors of Rs 6,000 were to be paid by him at this figure.
(b) B is to take over all stock for Rs 7,000 and some sundry assets at Rs 7,200 (being 10% less than the book value)
(c) C to take over remaining sundry assets at 90% of the book value and assume the responsibility of discharge of loan together with accrued interest of Rs 300.
(d) The expenses of realization were Rs 270
The remaining debtors were sold to a debt collecting agency at 50% of the book value. Prepare Realisation A/c, Partners Capital A/c and Cash A/c
The Balance Sheet of Ram and Shyam, who were sharing profits in the ratio of 3 : 1 on 31st March, 2009 was as follows:
|
Liabilities |
Amount Rs |
Assets |
Amount Rs |
||
|
Creditors |
2,800 |
Cash at bank |
2,000 |
||
|
Employees’ provident fund |
1,200 |
Debtors |
6,500 |
|
|
|
General Reserve |
2,000 |
Less: Reserve for bad debts |
(500) |
6,000 |
|
|
Capitals |
|
Stock |
3,000 |
||
|
Ram |
6,000 |
|
Investments |
5,000 |
|
|
Shyam |
4,000 |
10,000 |
|
|
|
|
|
16,000 |
|
16,000 |
||
|
|
|
|
|||
